Baidu is to raising money for a standalone AI chip company

Chinese hunt giant Baidu is currently in discussions to raise cash to get a standalone artificial intelligence semiconductor firm, an individual who knows this issue.

The movement is emblematic of a continuing push for China’s largest technology companies to boost their art from the chip industry. And for Baidu, it marks a further attempt to market its business well beyond advertisements.

Baidu’s Nasdaq-traded stocks jumped over 3.5% following hours. They climbed 6.67percent on Tuesday.

Baidu’s chip business is a subsidiary, together with all the search giant likely to be the vast majority shareholder, the individual said. Venture capital companies GGV and IDG Capital have included talks to put money into Baidu’s chip company, the source added. Both companies have extensive investments in China.

Baidu declined to comment when contacted by CNBC. IDG Capital wasn’t immediately available for comment. Calls into GGV’s offices in Singapore, Shanghai and Beijing went undercover.

Presently, Baidu has an in-house processor unit that has helped create its Kunlun semiconductors, designed to process massive quantities of information for artificial intelligence software. However a standalone chip organization is seen helping Baidu to commercialize its technology, the source stated.

The semiconductor company would target to sell chips to clients in many industries such as automakers, now facing a worldwide chip deficit.

A standalone chip manufacturer could also tie to various Baidu’s companies, for example, its driverless vehicle computer software.

Diversification flurry
Baidu’s relocation is part of the company’s drive to expand its more comprehensive firm — an attempt that since September alone has witnessed the Chinese technologies giant raise money to get a biotech company plus also a standalone electric car company.

Marketing accounts for most of Baidu’s earnings now, but other operations contribute to an increasing percentage of profits. Ad-related payments, which the company describes in its own earnings claims as online advertising solutions, accounted for approximately 80 per cent of overall revenue in 2018. That ratio dropped to 71 per cent in the next quarter of 2020, the latest results.

Baidu’s semiconductor focus comes as the Chinese government attempts to improve domestic liberty around that crucial technologies — a trend which has accelerated during China’s trade war with the United States.

Chinese net giant Tencent, the proprietor of messaging program WeChat, recently spent in an AI chip startup.

In 2019, e-commerce firm Alibaba established its primary processor to power artificial intelligence procedures.

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